Accounts Receivable Best Practices

1. Introduction 
2. Who I Am 00:01:52
3. Agenda 00:05:42
4. Defining A/R 00:06:06
5. A/R Importance 00:07:57
6. A/R Types 00:13:43
7. A/R Accounting 00:18:53
8. The 5 P’s of Habits 00:22:17
9. Eliminate A/R 00:24:49
10. Minimize A/R 00:27:41
11. A/R Optimization ROI 00:30:46
12. Grant Credit Carefully 00:33:02
13. Flexible Payment Types 00:34:25
14. Payment Type Costs 00:38:46
15. Discounts and Late Fees 00:41:40
16. Minimize Payment Terms 00:45:23
17. Customer Onboarding 00:48:59
18. Optimize Communications 00:52:47
19. Automate Processing 00:55:02
20. Track KPIs 00:59:09
21. A/R KPI Calculations 01:01:08
22. A/R Risks 01:03:15
23. Mitigating Fraud 01:06:36
24. Software Components 01:10:3
25. What to Look For 01:16:15
26. Tech Products 01:20:47
27. Evaluation Tips 01:23:04
28. Trends 01:27:39
29. Tips 01:33:05
30. Questions? 01:37:42
31. Key Takeaways 01:39:21
32. How We Help! 01:39:51
33. Speaker Closing 01:41:15
34. Presentation Closing 01: 41:47

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  Derek Henry, CPA, CFE

  Derek is an accomplished speaker, trainer, consultant, and developer with over 20 years of experience in public accounting, corporate accounting/finance, and software pre-sales. Over that time, he has taught, managed, and mentored hundreds of people on how to work with more efficiency, accountabilit [...]

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• Accounting (ACCG)00:18:55
• Accounts Receivable (AR) 00:00:06, 00:01:18, 00:05:47, 00:06:15, 00:13:38, 00:19:31, 00:20:05, 00:41:01, 01:06:09, 01:23:09
• Accounts Receivable Turnover (ART) 00:59:51
• ACH Credit 00:19:06
• ACH Debit 00:19:04
• Artificial Intelligence (AI) 00:10:27, 00:12:31, 00:38:59, 00:53:16, 00:58:18
• Asset 00:08:24
• Audit 00:09:36, 00:31:46, 01:10:18
• Average Days Delinquent (ADD) 00:59:29
• Bad Debt to Sales (BDS) 01:00:04
• Balance Sheet (BS) 00:19:09
• Cash Flow (CF) 00:08:54
• Contract 00:33:49, 00:46:34
• Cost 00:31:05
• Days Sales Outstanding (DSO) 00:31:13, 00:59:22
• Income Statement 00:19:10, 00:20:19
• Inventory 00:08:28
• Invoice 00:10:22, 00:27:54, 00:56:38
• Key Performance Indicator (KPI) 00:59:11
• Percentage of Credit Available (PCA) 01:00:23
• Reconciliation 00:56:50, 01:07:17
• Return on investment (ROI) 00:30:48, 00:32:32
• Revenue 00:19:08, 00:30:59
• Revenue Recognition 00:19:23 
• Vendor 00:33:42, 00:37:07
• Wire Transfer 00:34:39, 00:39:08

ACH Credit : An ACH credit is a type of ACH transfer where funds are pushed into a bank account. That is, the payer (e.g. customer) triggers the funds to be sent to the payee (e.g. merchant). For example, when an individual sets up a payment through their bank or credit union to pay a bill, this would be processed as an ACH credit.

ACH Debit : An ACH debit transaction occurs when the originator of a transaction authorizes the recipient to “pull” funds from his or her account. For example, say a customer wants to pay an electric bill via ACH debit.

Accounting (ACCG): A systematic way of recording and reporting financial transactions for a business or organization.

Accounting Receivable (AR): Accounts receivable, abbreviated as AR or A/R, are legally enforceable claims for payment held by a business for goods supplied or services rendered that customers have ordered but not paid for.

Accounts Receivable Turnover (ART): Accounts receivable turnover (ART) ratio measures how often a company collects its average accounts receivable within a specific period, typically a year. It is a reflection of the company's efficacy in issuing credit and collecting debts, serving both as a marker of financial health and a predictor of cash flow.

Artificial Intelligence (AI): Artificial intelligence is intelligence demonstrated by machines, as opposed to the natural intelligence displayed by humans or animals.

Asset: Property owned by a person or company, regarded as having value and available to meet debts, commitments or legacies.

Audit: A formal examination of an organization's or individual's accounts or financial situation

Average Days Delinquent (ADD): "Average Days Delinquent" (ADD) refers to the average number of days that invoices are past due, essentially measuring how long, on average, it takes for customers to pay their overdue bills, providing a key metric for accounts receivable teams to evaluate payment delinquency across customer accounts and optimize collection processes.

Bad Debt to Sales (BDS) : The bad debt to sales ratio is the percentage of a company's sales that are lost due to unpaid invoices. It's a key metric that shows how much of a company's profit is lost to bad debt.

Balance Sheet (BS): A financial report that summarizes a company's assets (what it owns), liabilities (what it owes) and owner or shareholder equity at a given time.

Cash Flow (CF): The revenue or expense expected to be generated through business activities (sales, manufacturing, etc.) over a period of time.

Contract: A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.

Cost: The sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location

Days Sales Outstanding (DSO): Days sales outstanding (DSO) is a measure of the average number of days that it takes a company to collect payment for a sale. DSO is often determined on a monthly, quarterly, or annual basis. To compute DSO, divide the average accounts receivable during a given period by the total value of credit sales during the same period, and then multiply the result by the number of days in the period being measured.

Income Statement: One of the three primary financial statements used to assess a company's performance and financial position (the two others being the balance sheet and the cash flow statement). The income statement summarizes the revenues and expenses generated by the company over the entire reporting period. (investinganswers.com)

Inventory: A company's inventory typically involves goods in three stages of production: raw goods, in-progress goods, and finished goods that are ready for sale. Inventory or stock refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilization.

Invoice: An invoice, bill or tab is a commercial document issued by a seller to a buyer, relating to a sale transaction and indicating the products, quantities, and agreed prices for products or services the seller had provided the buyer. Payment terms are usually stated on the invoice.

Key Performance Indicator (KPI) : A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets.

Percentage of Credit Available (PCA): "Percentage of credit available" refers to the proportion of a company's total accounts receivable that is made up of credit sales, essentially indicating what percentage of the money owed to the company by customers is due to credit extended to them, rather than cash sales; it's calculated by dividing the total accounts receivable balance by the total credit sales and multiplying by 100.

Reconciliation: Payroll reconciliation is when you compare your payroll register with the amount you're planning to pay out to your employees to confirm those numbers match. The simplest way to think about it is double-checking your math to ensure that you pay your employees correctly. Payroll reconciliation should happen frequently.

Return on investment (ROI): A measure used to evaluate the financial performance relative to the amount of money that was invested. The ROI is calculated by dividing the net profit by the cost of the investment. The result is often expressed as a percentage. See an example here.

Revenue: In accounting, revenue is the income that a business has from its normal business activities, usually from the sale of goods and services to customers. Revenue is also referred to as sales or turnover. Some companies receive revenue from interest, royalties, or other fees.

Revenue Recognition: Revenue recognition is an accounting principle that outlines the specific conditions under which revenue. In accounting, the terms "sales" and "revenue" can be, and often are, used interchangeably, to mean the same thing. Revenue does not necessarily mean cash received.

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.

Wire Transfer: Wire transfer, bank transfer or credit transfer, is a method of electronic funds transfer from one person or entity to another. A wire transfer can be made from one bank account to another bank account or through a transfer of cash at a cash office.